\u3000\u3 China Vanke Co.Ltd(000002) 920 Huizhou Desay Sv Automotive Co.Ltd(002920) )
The company issued the annual report of 2021 and the first quarterly report of 2022. In 2021, the company realized a total operating revenue of 9.57 billion yuan (+ 40.7%); The net profit attributable to the parent company is 830 million yuan (+ 60.7%); The earnings per share is 1.51 yuan, and the cash dividend of 4.5 yuan (including tax) is proposed to be distributed for every 10 shares; In 2022, Q1 achieved an operating revenue of 3.14 billion yuan (+ 53.9%) and a net profit attributable to the parent company of 320 million yuan (+ 39.2%), both slightly exceeding expectations. The company has obvious first mover advantages in intelligent driving domain controller and other fields, and its products are constantly upgraded; In the field of intelligent cockpit, the products are fully developed, the orders are in good condition, and the favorable performance continues to grow. We expect that the company’s earnings per share from 2022 to 2024 will be 2.13 yuan, 2.79 yuan and 3.57 yuan respectively, which will be raised to the buy rating.
Key points supporting rating
Revenue continued to grow at a high rate and the performance slightly exceeded expectations. In 2021, the sales volume of cars outside China resumed growth, and the company’s new products were put into operation one after another, driving revenue growth of 40.7%, including 7.89 billion yuan (+ 33.5%), 1.39 billion yuan (+ 94.8%) for intelligent cockpit, 290 million yuan (+ 65.1%) for Internet service and others. The annual gross profit margin increased by 1.2pct, which is expected to be mainly due to the increase of 9.9pct brought by the scale effect of intelligent driving products. The sales expenses increased by 9.9%, and the cost control effect was remarkable; Management expenses increased by 42.1%, mainly due to the increase of employee salary; R & D expenses increased by 39.4%, and high-intensity R & D investment ensured continuous competitive advantage; Financial expenses increased by 73.9%, mainly due to the decrease of exchange gains; In the whole year, the four expense rates decreased by 0.4pct year-on-year, coupled with the increase of revenue and gross profit margin, the net profit deducted was 820 million yuan (+ 77.7%). Among them, 21q4 company achieved a revenue of 3.27 billion yuan (+ 30.6%), with a year-on-year increase in gross profit margin of 0.7pct, a year-on-year increase in four expense rates of 1.8pct and a deduction of non net profit of 340 million, reaching the best level in the quarter. 22q1 achieved a revenue of 3.14 billion yuan (+ 53.9%), a year-on-year decrease of 1.1pct in gross profit margin (slightly higher base in the same period), a decrease of 0.7pct in four expense rates, and a net profit attributable to the parent company of 320 million yuan (+ 39.2%), with a slightly higher performance than expected.
The intelligent driving domain controller is gradually upgraded, and the order is in good condition. In the field of intelligent driving, with the evolution of electronic and electrical architecture from distributed to centralized, domain controller has become the core component of intelligent driving and intelligent cockpit, and has gradually ushered in an explosion. The company took the lead in mass production of intelligent driving domain controller ipu03 on Xiaopeng P7 and other models. Based on NVIDIA Orin chip ipu04, the company successfully rolled off the assembly line in September 2021 and obtained orders for a number of models. It is expected that it will be mass produced in a large scale within the year. The company takes the lead in the field of domain controllers and cooperates closely with NVIDIA. With obvious first mover advantages and high product value, it is expected to continue to benefit from the outbreak of the industry. In 2021, the company obtained new project orders with annual sales of more than 12 billion yuan, with a year-on-year increase of more than 80%, including intelligent driving products of more than 4 billion yuan. The mass production of the project is expected to promote high performance growth.
Intelligent cockpit products are fully developed. In the field of intelligent cockpit, the company’s second-generation cockpit domain controller has been mass produced on a large scale. The third-generation cockpit products have been designated by Great Wall Motor Company Limited(601633) , ideal cars and other customers. The company has cooperated with Qualcomm to develop the fourth-generation intelligent cockpit system. The continuous upgrading of products is expected to bring continuous value. In addition, orders for display modules and performance instruments are in good condition, and breakthroughs have been made in Dongfeng Nissan and Xiaopeng automobile. Intelligent cockpit products are fully developed, which is conducive to the continuous growth of good performance.
Valuation
Considering the increase of orders and the mass production of new projects, we raised our profit forecast. It is expected that the earnings per share of the company in 20222024 will be 2.13 yuan, 2.79 yuan and 3.57 yuan respectively, which will be raised to the buy rating.
Main risks of rating
1) the automobile sales volume is lower than expected; 2) The progress of new products is less than expected; 3) The price of raw materials increases or the price of products decreases.
